Key points
- Sydney market will still have momentum but rate of growth will slow.
- Melbourne will slow at a rapider rate and some areas, like Perth, will go backwards.
- Best prospects are in areas like Newcastle and the Sunshine Coast.
Angie Zigomanis is senior manager for residential property at BIS Shrapnel and just before Christmas he updated his forecasts for major Australian cities.
[1]Source: BIS Shrapnel
Here’s what he says about each market.
Sydney
We still think there will be momentum in the Sydney market. There will be growth in 2015 but not the kind of double-digit growth we’ve seen. There should be 8% growth in this financial year and then progressively slowing after that.
Melbourne
Melbourne will slow, down to around 3%. It has had a longer period of strong construction and we don’t think there’s as much pent up demand. It has more economic headwinds than Sydney has.
Brisbane
The Brisbane market should strengthen. There has been underbuilding for quite some time and vacancy rates are low and that says to us that activity should pick up.
It’s probably still being stymied by muted economic conditions and the Newman government had a bit of public sector cull.
Adelaide
Things will continue to be tough.
Perth
We think prices will start to fall with a 1% decline, and further declines in 2016 and possibly in 2017. Investment will continue to drop over the next two or three years.
Canberra
We’ve also got a 1% decline factored in for FY15 and it could be potentially weaker. Public sector employment has also been hit.
Hobart
Tasmania is doing it tough economically. We think migration out of Tasmania has improved but probably because there is nobody else left to leave. Economically it doesn’t have a huge amount of opportunities.
Darwin
We forecast a 1% rise. Mining investment is around its peak level. It’s also experiencing a slow down in big infrastructure projects and we’re starting to see that reflected in the property market.
Newcastle and Wollongong
Both of these markets have started to pick up now and they are benefiting from the Sydney market. Probably more so Newcastle, because Newcastle gets a lot of commuters into the city.
There is always a bit of an outflow from Sydney once housing becomes less affordable. For now we’re picking 6% to 7% growth, but growth will be strong beyond the next 12 months.
Gold Coast and Sunshine Coast
They have been starting to pick up. Both these regions have been basket cases for the last four or five years. We’re starting to see migration pick up into those areas and economically they are starting to look a bit better. There’s the Sunshine Coast hospital, which was completed last year and on the Gold Coast you’ve got some Commonwealth Games related activity, as well as the extension of Pacific Fair.
Where will the opportunities be over the next 12 months?
I think most of the opportunities are probably in South East Queensland – Brisbane probably more so than the Sunshine, Gold Coast because it has a broader economic base. Within Brisbane the inner suburbs are starting to do well.
We’ve still got the strongest growth in Sydney. The more affordable areas are the outer Western suburbs but arguably they could potentially get ahead of themselves beyond the next 12 months. Liverpool and Penrith are the more affordable areas.
Inner city Sydney suburbs have struggled a bit. Prices in inner Sydney really rely on the stock market doing well, and businesses doing well. Your normal salary earners need to be on a very good wicket to be able to afford some of the top properties in Sydney.
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